Did China and Japan push US government to intervene?

The Japanese banks are back, says the Economist. And the Chinese banks have started playing a big global role, as the current US financial crisis is showing, according to Frank Sieren, a German author and China correspondent in an article in Die Zeit (printed edition) of September 25. The Japanese banks are buying themselves into American banks now. A Chinese state fund (CIC apparently) had entered both Blackstone and Morgan Stanley (about ten per cent in the case of the latter) earlier. Probably, the Chinese underestimated the problems in the pipeline at the time. Both Japan and China seem to have put pressure on the US government recently to start a rescue scheme.

China and Japan have in all likelihood decided to act together, to protect their investors´interests. How strongly Beijing waved the Dollar currency reserves around and threatened to change them into Euros is hard to tell, but that did provide leverage, of course.

China is still keeping a low profile – but not as low as it used to. A China Daily commentary is striking a rather new note: “The US government has its own criteria in determining what it ought to rescue, and Lehman Brothers was left to its own devices because of its high proportion of foreign investment. As a result, foreign investors suffered more than their US counterparts from the collapse of the century-old financial body.”

China Daily as the voice of the Chinese bankers – Don´t mess with us.

This should be food for thought for the American voters. Foreign debts are political.

And the world´s export champions should get prepared for a world where America is buying less.

Two Pictures that I should have taken…

Een Nederlandse Schipper

… but hesitated to.

One was a pasttime skipper. He came down the Turf Canal in Bremen-Findorff. He was obviously a pensioner with a neat white beard, he wore a captain’s cap (white with a black visor, and a golden anchor above the visor), a white suit, and he could have qualified for Love Boat.

He was alone in his boat. There would have been space for one more person in the cockpit. The vessel was less than two meters long, and the German flag flew from the pole on the stern, safely above the water.

I was wondering if he flew a German flag from his bathing tub at home, too. And I was wondering if I should take a photo. But something held me back. Even though he looked like a captain, I probably felt that he was travelling the Turf Canal in his private capacity, and dreaming a dream of his long-gone childhood.

The other was an old bum. I could still take the picture now – he can be found in pretty much the same places every day. He´s driving around another German flag – from the rack of his shoddy bicycle. I was thinking about taking a picture and putting him on this blog, maybe with a caption like  “He has a fatherland”.

But that´s like forcing an old lonely bum with few places to go into hiding. I´m glad that I´m no photo reporter who has to deliver every day.

Instead, I chose an old picture from the Netherlands. The boat was sixty years or older at the time I made the photo, and may still be on duty.

P.S.: Yes, I´ve rigged the colors.

Anything wrong with the US Treasury Secretary’s Bailout Plan?

No matter if a political system is a dictatorship or a democracy, every debate that concerns the public as much as Secretary Paulson’s bailout plan will contain some ideological elements. The American search for an effective rescue package to weather the financial crisis can’t be an exception. But this is a blog, this post is just a monologue, and I can try to be as unideological as my wits allow. Is the Troubled Asset Relief Program (TARP),  to be financed with 700 bn US-Dollars, an efficient and reasonable approach?

The question if it meets everyones’ standard of social equity shouldn’t be at the center of such considerations. Even for just one reason alone, this aspect would make little sense. After all, it took two parties for each subprime mortgage contract – creditors (the “big shots”?) and borrowers (“common people”?). In many cases, the borrowers weren’t exactly judgmental either (to put it mildly), and aren’t they grown-ups? When many potential borrowers and would-be home owners went for the biggest amount at the “best” (i. e. easiest) possible conditions, it became hard for any bank to be a saint, while competitors struck the deals. For sure, it would be wrong to make decisions with such far-reaching implications as TARP with the motivation to see a huge ostracism within the financial world. The costs of such righteous indulgence could be way out of proportions.

Equity questions have to arise when governments provide help to whoever – usually based on tax money. They also have to arise in the current TARP discussion. But if the latest edition of the Economist (September 27) publishes accurate numbers, concerning the gross fiscal cost in per cent of GDP, America would fare better with TARP, than Finland, Mexico, and above all Japan and South Korea with their bail-outs from 1991 to 1997. And it is hard to imagine how anyone who considers the welfare state an accomplishment should be happily leave the crisis to itself, with the (more or less) foreseeable effects on home owners, employees, and society in general.

Yet I’m getting the impression that both the debate on the electronic media, plus the savvy Economist, leave too many questions open. I hear too little about the possible or foreseeable costs of leaving the crisis to itself. And some of the Economist‘s arguments in favor of TARP and against other options make me wonder. Stuff like this:

Why buying assets, rather than injecting cash directly into the banking system? This could discourage private investors, says the Economist. That may be so – I can’t judge that. But the second argument against this suggestion sounds dubious: “.. banks might not volunteer to sell equity to he government before they reach death’s door (…) In any event, the Treasury plan could be flexile enough to permit such capital injections.”

If such stubbornness among bankers is likely, one has to wonder if things are really as serious as Secretary Paulson and Fed Chairman Bernanke painted them in Congress. Or, if the stakeholders in this crisis are still not ready to act in a responsible way. That doesn’t speak for a long-term learning effect from the crisis. What are the costs if state intervention after every excessive spate of speculation encourages more of the same irresponsible behavior? Is inaction really more dangerous than action, in the long run?

The Economist, despite all the laudable warnings of its own against unchecked financial manoeuvring during recent years, seems shy to answer such questions now. But they still matter – even in a situation that is calling for rapid decisions.

________________________________

Economist: In favor of TARP  /  Douglas Elmendorf: Concerns about TARP.

Hermit: Dressing-down for such Stupid Questions

Hello Children,

Hermit the (angry) Taoist Dragonfly

at last, those foreign oppressors must obey the law! No longer will those more than 100 foreign-funded big companies get away without collective contracts with their depredated employees!

Whad’ya saying? Yes – you? There are Chinese bosses who treat their employees like dirt and are not even obliged to take measures for working safety, because the local cadres will turn a blind eye? That there is no level playing-field for foreign companies in China, as long as Chinese oppressors may continue to oppress their workforce? That foreign companies usually offer better conditions than Chinese companies already?

Haha – how stupid you are! What a simple question! Here is a proverb for you, stupid brat:

“为人民利益而死，就比泰山还重.” – “To die for the people’s benefit weighs more heavily than Mount Taishan.”

And this one is from me: “在洋鬼子的手中死就比泰山还重!” (To die at the hands of a foreign devil weighs more heavily than Mount Taishan.”)

On the other hand, starving or dying at the hands of a Chinese boss if you are a simple dirty worker is nothing to complain about. It’s part of our Great Culture and Tradition.

So shut up and think before you open your big mouth next time!

Got to fly now! Im aaaangry!

State Food Monitoring and Movie Monitoring

“我想，如果相关部门能够像审查电影一样来管理奶粉质量的话，一定不会出现今天这种局面。” (刘仪伟)

“I’m sure the scandal would not have happened if government officials inspected baby formula as strictly as they inspect films.” (Liu Yiwei)

Can the White Rabbit be trusted?

No ordinary rabbit?

Nay, they never trusted China anyway – as this back issue concerning territorial disputes with China shows. But now, another pressing question is arising: can the White Rabbit be trusted? It says it’s full of creamy flavor and high in nutritive value.

If that’s no reason to be on my guard…

On the other hand, the creamy candies come at only 0.35 Rupees (if I got that right), and it does look yummy.

Then again, melamine was found in it in Singapore late on Sunday, reports The Australian.

Could it be worse than that one?

Some Invasion Threats are easily manageable

No unhealthy stuff

Such as these against Vietnam. From those Chinese internet grasshoppers (not targeted at you, Hermit) who discussed occupying Vietnam.

In a statement to the South China Morning Post, Vietnamese Foreign Ministry spokesman Le Dung confirmed Beijing officials had been asked “to act so that such negative articles will not appear again since these may be harmful to … bilateral relations”.

“This is irrelevant information which goes against the trend of peace, friendship and co-operation for development in the region and the world and is not in the interests of the fine relationship existing between Vietnam and China,” Mr Dung said.

Source: washingtonbureau.typepad.com/china/

Censorship can enhance friendship among the peoples of the world and be conducive for world peace.

Invading Vietnam, on the other hand, is very unhealthy.
Just think about it.

Wen Jiabao: A Sunday Inspection Visit to Chang An Supermarket

(Translation, Excerpts. Photos at the original article in Chinese.)

“First, take me to the bulletin board”, said Wen Jiabao after arrival at the Chang An supermarket’s main entrance, passing through the big shelves and going directly to the “Xicheng District Food Safety Public Information” bulletin board. When he saw that the information on the milk issue clip was no eye-catcher, he turned to the accompanying comrades from the responsible city departments and demanded that the public information should be written in bigger characters and be put at the most visible place. He said, “We want to do two things: one is to get the problematic dairy products off the selves; and secondly, we need public notifications which inform the people (老百姓) as early as they are coming in.”

Wen Jiabao took a fresh milk packet off the self and looked at it closely for the production date. Only after looking, he saw that the production day was 20 September.

“We want to do one more thing”, he told everyone. “Every batch of milk powder and dairy products will go through examination. After that, we add another label – so that the masses know that they can use it and be at ease.”

“The method you are suggesting is good”, said the responsible of Chang An Supermarket. “This isn’t only good for the supermarket, but also for the consumers, the factories and the dairy farmers.”

Before leaving the supermarket, Wen Jiabao loudly told the masses his ideas about the notification board and the additional labels, asking for everyone’s suggestions, “is that alright?”

“Alright!”, the people in the supermarket replied with one voice.

Source: china.com